• USD/INR is aiming to recapture its all-time highs at 80.20 despite weaker DXY.
• FII selling spree and widening fiscal deficit are hurting the Indian rupee.
• The US economy may face the headwinds of lower job additions in the labor market.

The USD/INR pair is auctioning comfortably above 80.00 and is aiming to recapture its all-time high at 80.21, which was recorded last week. The asset is aiming higher despite a steep fall in the US dollar index (DXY) this week. The catalyst which is weakening the Indian rupee is the widening fiscal deficit.

The Indian economy is importing cheaper Russian oil in bulk, catering to its higher dependency on oil imports to address its massive demand. Also, the economy has restricted the exports of wheat and sugar, which has led to a widening fiscal deficit.

Apart from that, Foreign Institutional Investors (FIIs) are in deep selling mode and channelizing their funds from the developing country into the US, considering interest rate elevation by the Federal Reserve (Fed). The Indian economy is operating at an inflation rate of around 7% and the Reserve Bank of India (RBI) is in no hurry to accelerate its repo rate in its August monetary policy meeting vigorously.

Meanwhile, the US dollar index (DXY) has tumbled below 107.00 after failing it convert the pullback move into a bullish reversal. The asset is declining towards its fresh two-week low at 106.39. The DXY may extend its losses as the labor market in the US may bear the consequences of higher price pressures.

Google has halted its recruitment process for the past two weeks, which indicates lower demand prospects. A slippage in the employment generation process may force the Fed to paddle interest rates at a slower rate.